2021 got off to a quick start and in the current Crypto Bull market, assets like Bitcoin (BTC) and Ether (ETH) shot to new all-time highs almost daily.
While new price highs are positive for investors, they pose a number of challenges in terms of fees, transaction speeds and the centralization of a decentralized ecosystem. Since mid-2020, institutional investors have been pouring into cryptocurrency, which increases the problem of scalability, high transaction costs and the long confirmation times for the Bitcoin and Ethereum blockchain.
Eth2 is rolling out all the time, but it may take time for users to take advantage of its many new features. This leaves the door open for other candidates to fill the void, and a handful of Layer 2 projects are gaining traction in the decentralized finance space.
One such project that has made waves in the past 6 months is Solana (SOL). Solana was founded by Anatoly Yakovenko and has designed a team of former engineers from globally recognized companies such as Intel, Dropbox and Qualcomm. Solana claims to be a censorship-resistant blockchain that provides the open infrastructure required for global adoption.
Some experts see the project as a potential competitor to Ethereum, and Sam Bankman-Fried, co-founder and CEO of FTX Exchange, endorsed the project when he selected it to host his DeFi project called Serum.
According to Bankman-Fried, Ethereum is unable to handle the rapid growth in the decentralized financial sector. The only way to get around the challenges of scalability and transaction fees is to build on top of other networks like Solana.
Bankman-Fried claims to have thoroughly tested more than 30 of the top blockchain projects, including Ethereum, before choosing Solana. In the past, he referred to the network’s ability to process 50,000 transactions per second.
When asked about scaling improvements with Eth2, Bankman-Fried suggested that this was still insufficient. The crypto sector needs something that is “not only 100 times faster than Ethereum, but about a million times faster than Ethereum”.
Solana token gains traction
Initially, after being listed on exchanges in April and July 2020, the SOL token traded between $ 0.50 and $ 0.91. This was before any major project developments were announced, but on July 27, Bankman-Fried tweeted:
“Serum is based on the @ solana blockchain. Solana can process 10,000 times as much as Ethereum. and it’s 1,000,000 times cheaper. And in contrast to many side chains, Solana is a full, decentralized blockchain with over 100 validators. “
Shortly after the announcement, SOL saw a noticeable spike in buying pressure as volume and price increased over the next two months as the average daily volume rose from $ 1M to $ 41M and the token price rose to $ 4.89 .
When the DeFi bull run ended and traders took profits, SOL was not spared the carnage and its price fell to $ 1.21 before recapturing the $ 3.00 range last month.
Not only does the Solana blockchain exist as an efficient alternative to the Etheruem network, it has also followed in the footsteps of other networks realizing the importance of stable coins for the growth of the crypto sector.
In response to the OCC’s recent announcement that banks “could use new technology, including INVNs and associated stablecoins, to perform bank-legal functions such as payment activities,” the Solana team tweeted that the approval would also benefit SOL and the network. Twitter feed.
The team said:
“Good news for public blockchains and stablecoins! USDC is already integrated with Solana, the only chain that can now process more than 50,000 txns per second with fees as low as $ 0.00001 per txn. There are currently over 50,000,000 USDC-SPL in circulation! “
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